A news release today from the Food and Agriculture Organization of the United Nations (FAO) stated that, “The FAO Food Price Index fell one percent in October 2012, and for the first ten months of the year food prices were on average eight percent lower than in the same period in 2011.
“The Index dipped two points to 213 points from September’s revised level of 215 points. The decline was largely due to lower international prices of cereals and oils and fats, which more than offset increases in dairy and sugar prices.
“Meanwhile the FAO Food Outlook, a bi-annual global market report also published today, noted that lower international prices and freight rates, together with lower cereal purchases, could push down the world food import bill in 2012.”
Farm Bill Issues- Political Notes
Reuters writer Charles Abbott reported yesterday that, “Federally subsidized crop insurance will be a big target for lawmakers looking to cut the budget deficit in the lame-duck session of Congress opening next week, agricultural policy experts agreed the morning after a status-quo general election.
“But lawmakers will probably be unable to break their deadlock over enacting a five-year, $500 billion farm bill covering a wide range of agricultural policy from food stamps to crop subsidies and soil conservation.”
However, the article noted that, “The major U.S. farm groups made a strong crop insurance program their top priority for the bill, even if it meant cutting other agricultural supports.
“‘Why start attacking the one tool we’ve been guiding people toward for 25 years?’ asked Dale Moore, a lobbyist for the 6 million-member American Farm Bureau Federation.”
And, Marcia Zarley Taylor reported yesterday at DTN (link requires subscription) that, “In the 1980s, any drought that sent yields in significant parts of the central Corn Belt to 4 to 20 bushels per acre would have triggered another wave of credit delinquencies. But it isn’t just crop farmers who averted what could have been financial cataclysm in 2012. Their creditors got a free pass from revenue-based crop insurance, too.
“Farm lenders attending the National Agricultural Bankers conference this week in Milwaukee, Wis., said they can exhale now that an estimated $24 billion in crop insurance claims are in the mail or awaiting audit reviews. Farmers insured more than 80% of the nation’s hard-hit corn crop this season…”
The DTN article pointed out that, “‘Livestock is another story, but I never worried about our crop farmers this year because I knew so many of them had bought insurance,’ said Sam Miller, managing director for BMO Harris Bank’s ag division in Appleton, Wis. BMO Harris finances operations in hard-hit Wisconsin, Indiana, Missouri and Michigan, where some corn clients reported average yields as low as 4 bpa.”
Ms. Zarley Taylor indicated that: “So while crop insurance will likely plug big holes in grain borrowers’ credit lines this season, livestock producers who buy most of their feed will pose more difficult questions.”